A study of development agency as an augmenter in the commercialisation of the mobile applications development SME sector in the Western Cape through business model innovation in response to disruptive innovation

Abstract

The central thesis of this study is that a multi-factorial strategy model can be evolved to enable development agency to be an augmenter in the commercialisation of the mobile applications development SME sector through business model innovation in response to disruptive innovation. The concept of augmentation in the context of this study acknowledges that disruptive innovation is ubiquitous and that development agencies can help these SMEs to succeed through business model innovation. This can be achieved through the implementation of a multi-factorial strategy model. A multi-factorial strategy model in this context is regarded as a method or plan having stemmed or stemming from a number of different causes or influences detailing the logic and the key considerations on the path to defining an organisation’s strategy. The development agency can utilise it to determine the state of the business and what the appropriate response should be, by way of business model innovation in response to disruptive innovation. This study rests on three tenets, namely, the uncovering of the dimensions of business model innovation; the nature of disruption; and finally, the potential role of the development agency in supporting SMEs in the technology sector. The mobile application (app) economy has presented business potential for SMEs and this sector of the economy can be facilitated by development agencies. Governments make use of development agencies to assist, develop and support growth within a region through the provision of resources and assistance, usually from state organisations. The enterprise development strategy should ensure the viability of the business idea, which should lead to the creation of new business value. The fieldwork for this critical realist study consisted of five phases. Phase 1 involved interviews with academics from the four higher education institutions in the Western Cape; Phase 2 involved an interview with mobile application development SMEs; Phase 3 comprised a focused interview consisting of members from industry and the development agency; Phase 4 involved interviews with entrepreneurs within the innovation and technology sector; and Phase 5 involved interviews with development agencies supporting the development of SMEs. Despite their potential, mobile app development businesses in the Western Cape face difficulties in commercialising their applications. The study suggested that research is warranted around the establishment of a multi-factorial strategy model which could provide a strategy for enhanced commercialisation of mobile app development. This model would have to address a number of concerns, depending on the propensity of the business towards mobile app development. Research into what adjustments to the current business models of these businesses are required to enter into mobile app development was also recommended. The findings and interpretations of this critical realist study revealed a structured real world of the landscape of mobile application development in the Western Cape, South Africa, by identifying its key constructs. It then revealed that knowledge is socially produced by identifying the salient imperatives that inform the role of the development agent with respect to business model innovation and disruptive innovation. By means of critical discourse analysis of the views expressed by the respondents, it revealed the emancipation agenda of mobile application development in the Western Cape, South Africa. In doing so it also ultimately uncovered the generative mechanisms in understanding, amongst others, what the critical performance underpinnings are. It is recommended that the SME sector implement business model innovation to respond to disruptive innovation, defined as “emerging technology whose arrival in the marketplace signifies the eventual displacement of the dominant technology in that sector” (Ganguly, Nilchiani & Farr, 2010, p. 35). The proliferation of disruptive innovation has led to technological innovation and such innovation will impact on SMEs in South Africa. The concept of business model innovation suggests that SMEs should move to a progressive interdependent modality where they participate through their shared strengths. The collaboration with other mobile app development SMEs would allow for their independent weaknesses to be moderated. Through business model innovation, mobile app development SMEs should be able to respond to the disruptive innovation and ensure success and sustainability. The antidote to disruption should be progressive management by way of business model innovation. In this sense then, the antidote to disruptive innovation is a management response that should be understood across the sector in which the study is undertaken.